Transportation & Logistics Analysis

Ship cargo declarations: the learning period is over

June 04 2020

Inaccurate declarations regarding the weight and nature of the cargo carried in containers are costly for the shipping companies. Following what can be termed a learning period, they can now be expected to take a firmer line.

On June 1, the Chinese transport ministry introduced tighter controls and fines for incorrect declarations regarding the nature and weight of goods carried in containers whether as a result of poor calculation or fraud. China's decision has brought grist to the mill of the world's shipping companies, many of which have in recent weeks announced measures on their own accounts, imposing significant fines on shippers for failure to respect cargo declaration rules. It has become clear in the light of the most recent incidents that the learning period is now over and that shipping companies feel that they are in a strong enough position to take a more repressive approach on the question.

There are two sides to every coin… Shippers' failures must not serve as a smoke screen for deficient lashing and locking of containers on deck, for which the shipping companies have direct responsibility. The recent loss of 40 containers by the APL England off the Australian coast as a result of inadequate locking is an example of the errors which can be committed by the shipping companies. The rare container carriers of the preceding generation which had guide rails (OOCL Hong Kong type class), which provided a real answer to the problem, have virtually disappeared. They have been dropped mainly on the grounds of profitability since this system reduces available space aboard and involves additional port cargo-handling time.

The fact remains that the guide rails, even if they offered greater security for containers on deck, particularly against parametric rolling, had no bearing on the weight and nature of the goods in containers. From this point of view, the shippers are the ones in the front line. We propose here, therefore, a quick reminder regarding good practice and shippers' obligations.

Verified Gross Mass

It is incumbent on the shipper or the party loading the cargo on the shipper's behalf to declare its verified gross mass (VGM). The VGM is made up of four components: the weight of the cargo ex-warehouse + the weight of its packaging + the weight of blocking material inside the container + the weight of the empty container (tare) into which the cargo will be loaded. Stricter control of the VGM is needed following the slippage seen in 2019.

In practice and since it is impossible to physically weigh each full container, discrepancies of 2-3% between the declared and actual weight are tolerated when checks are carried out. The shipper does not have access to the empty weight of the container to be used until it is picked up at the depot. It is a safe bet, however, that, for discrepancies of more than 5%, the shipping companies are going to bill much more extensively than they did previously.

Wrong and false cargo declarations

1/ Dangerous goods, undeclared or not properly declared

Penal action should be taken in all such cases since such omissions are virtually criminal. The deliberate failure to declare dangerous goods has already been directly responsible for the loss of human life and capital. Very heavy fines, running to several hundred million dollars, will now be imposed in all such cases, which, sadly, have been a too regular occurrence in recent years. Last January, to cite just one recent example, a container full of lithium-ion car batteries, which had been negligently declared as non-dangerous automobile parts, was unloaded burning from a Cosco ship bound for Nhava Sheva.

2/ Declarations which are too vague

This is a different subject which is more difficult to deal with because if it is more commercially sensitive. In a great number of cases, for commercial confidentiality reasons rather than out of any wish to deceive the authorities, shippers avoid being too precise in their declarations so as to protect their goods from "predators". The predators can be direct competitors, unscrupulous intermediaries using the information to try to modify or appropriate commercial contracts or even mafia gangs.

In keeping with IMO rules, companies must find the right balance between the need to share information about the cargo so that security regulations are respected and the need to preserve business confidentiality between companies and customers. This is clearly one of the major issues raised by the current trend towards digitalisation. It is, moreover, one of the reasons that the move to digitalisation has begun so late in this area. A more scrupulous application of the use of HS Codes, going beyond the first six figures of the relevant goods category, would seem to be one convincing response to the problem.

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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